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Citation: Nagano, A. Value

Propositions for Small Fashion

Businesses: From Japanese Case

Studies. Sustainability 2022, 14, 3502.

https://doi.org/10.3390/su14063502

Academic Editors: Hyo Jung

(Julie) Chang, Stacy H. Lee and

Seoha Min

Received: 29 December 2021

Accepted: 14 March 2022

Published: 16 March 2022

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sustainability

Article

Value Propositions for Small Fashion Businesses:From Japanese Case StudiesAki Nagano

Independent Researcher, Bunkyo, Tokyo 1130021, Japan; ngnak2017@gmail.com

Abstract: Environmental problems at the global level have become a critical issue in today’s fashionindustry. However, small-and medium-sized fashion business (SMFBs) encounter barriers in promot-ing green business owing to finances, professional expertise, knowledge, and technology. Therefore,innovative ideas are vital for SMFBs to effectively address constraints to compliance. The purpose ofthis research is to analyze how SMFBs develop the interactive nature of value propositions based onthe case studies of the Onomichi Denim Project and the REKROW and addresses what elements areassociated with value propositions based on the human-centered perspectives. This study collecteddata through face-to-face and remote interviews, and a review of the previous literature, includingmagazines, websites, and videos. This study identified four value elements contributing to valuepropositions: environmental value, embedded social value, synergetic value, and educational value.These elements developed through various forms of interaction, such as a unique co-productionsystem embedding social ties and the establishment of a production-oriented circular economy. Thestudy proposed value creation through value proposition as a strategy crucial to managing SMFBs.

Keywords: value proposition; value co-creation; small fashion business; human-centered approach;circular fashion; the Onomichi Denim Project; the REKROW

1. Introduction

Due to the rapid expansion of the global fashion market, the fashion industry hasincreasingly influenced the environment. In 2021, with the goal of achieving zero wasteand carbon neutrality by 2050, the Ministry of Economy, Trade, and Industry, Ministry ofEnvironment, and Consumer Affairs Agency formed the Japan Sustainable Alliance with28 large apparel and textile companies [1]. To meet sustainable environment measures,small-and-medium-sized-fashion businesses (SMFBs) must also curb their environmentalburden. Statistics indicate that small-and-medium-sized businesses (SMBs) account for90% of businesses worldwide and cause approximately 70% of global pollution [2]. Largercompanies are capable of addressing environmental issues, whereas SMBs are generallylimited in finances, professional expertise, knowledge, and technology. Innovative ideasare vital for SMFBs to effectively address constraints to compliance. This study analyzesvalue propositions as a strategy to deal with the green business issues of SMFBs.

Vargo and Lusch (2004, 2008, 2016) developed a service-dominant logic (SDL) delineat-ing a new service marketing theory and introduced 11 foundational premises (FPs) [3–5].They noted the definition of service as the application of specialized competencies (knowl-edge and skills) to enhance individual benefits, processes, and performance [3]. Thisdefinition is relevant to explaining how SDL captures resources. In SDL, operand resourcesare resources that produce an effect after an operation or act is performed; operand re-sources act on operand resources [3]. Mainstream marketing shifts from operand resourcesto operant resources [3]. Moreover, according to Lusch et al. (2007), SDL is based on un-derstanding the interwoven fabric of individuals and organizations, brought together intonetworks and societies, specializing in, and exchanging the application of competenciesthey need for their own well-being [6] (p. 5).

Sustainability 2022, 14, 3502. https://doi.org/10.3390/su14063502 https://www.mdpi.com/journal/sustainability

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Recently, value proposition and the SDL are extended in their applications. Somescholars apply the concepts in environmentally friendly contexts. Stal and Jasson (2017)addressed sustainable consumption from the producer’s perspectives and investigated howSwedish fashion companies shape value proposition through various customer products-service-systems [7]. Ranta et al. (2020) addressed how business-to-business suppliers usecustomer-value propositions (CVPs) to articulate value in a circular economy [8]. Theyconducted case studies across several Finish industries. The findings showed that CVPs ina circular economy embody four alternative value creation logics, namely, resurrect, share,optimize, and replace values that are built from different forms of innovations and highlightdifferent design elements [8]. Although value co-creation is known to apply to both servicesand manufacturing industries, scholarly research has done little so far to understand it inrelation to SMFBs for green businesses. Additionally, Vargo and Lusch (2008) pointed outthe needs to investigate the interactive and networking nature of value propositions [4].Moreover, value prepositions are considered to be essential premises of value co-creation.Therefore, this study analyzes how value propositions contribute to create benefits of greenbusiness based on a case study method to analyze two Japanese small fashion firms, theOnomichi Denim Project and the REKROW in Japan. The Onomichi Denim Project employsa unique co-production approach in terms of a human-centered approach to manufacturejeans and co-create values for customers. The REKROW collaboratively produces clothingupcycled from used denim uniforms, which are value co-creation in a circular fashionsystem based on the business-to-business interactions.

The overall objective of this study is to explore how SMFBs develop the interactivenature of value prepositions based on case studies of the Onomichi Denim Project and theREKROW and bring about a shift from the traditional modus operandi to co-creation ofgreen business. The study proceeds as following. It first establishes an analytical frameworkarticulating the concepts of SDL and the human-centered approach, and then investigatesthe elements contributing to value propositions from each human-centered perspective.

The remainder of the study is structured as follows: Section 2 conducts literaturereviews, Section 3 presents a description of the analytical framework, Section 4 describesthe methodology and framework, Section 5 analyzes the case studies, Section 6 presentsthe findings and discussion, and Section 7 presents the contributions and implications, andfinally concludes the study.

2. Related Literature

The study regards value propositions and SDL as a theoretical foundation, and bothhuman-centered approaches and circular fashion subordinate to this foundation. Thereason is that Lusch and Vargo (2006), referring to SDL, clearly distinguished value co-creation and co-production, positing that value co-creation is an upper concept relativeto co-production; the latter forms part of the concept of human-centered approach [9].Additionally, a circular economy requires human engagement such that all actors workacross different industries and economies [8]. Thus, human-centered approach is alsoa critical concept of the circular economy. This section conducts a literature review ofhuman-centered approaches, circular fashion, value proposition, and SDL, articulatingeach concept to establish the analytical framework.

2.1. Human-Centered Approaches in a Field of Fashion

The human-centered approaches have promoted in-depth arguments in various stud-ies. This section focuses on a field of fashion literature and reviews major human-centeredapproaches, namely, co-creation, co-design, co-production, and co-use.

Sanders and Stappers (2008) defined co-creation as any act of collective creativityshared by two or more people [10]. It is generally regarded as an extremely broad termwith applications ranging from the physical to the metaphysical and from the materialto the spiritual [10]. Suryranna et al. (2017) posited that the development of informationand communication technology rendered the co-creation of value easy for the fashion

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industry [11]. The authors conducted a questionnaire survey to conduct a virtual co-creation of hijab fashion between customers and providers in Indonesia to redesign aconceptual model for virtual co-creation based on the motivation of consumers. Bujor et al.(2017) focused on the co-creation through a case study of AWAYTOMARS to identifycollaborative crowdsourcing business models [12]. AWAYTOMARS is a British start-upthat designs garments through co-creation on the Internet. The authors noted that thereason for involving consumers in the process of producing new items is to listen andbecome closer to consumers, which creates a unique value and replaces the traditionalway of thinking [12]. They argued that crowdsourcing platforms support the co-creationprocess and suggest the importance of an open innovation tool [12].

The next literatures of human-centered approach focus on co-design. Kwan et al.(2019) analyzed the psychological value of a co-designed footwear through workshops forolder women in Hong Kong [13]. The authors argued that using appropriate footwear canreduce the risk of falls among the geriatric population [13]. The method applied was basedon a questionnaire survey that investigated the perceptions of the participants about thetopic of geriatric footwear and the features of its design. Notably, the co-designed approachpromoted positive psychological impacts on the elderly and influenced their acceptance ofthe final projects. Hur and Beverley (2019) conducted another research on co-design with afocus on fashion design [14]. The authors explored the role of craft in a co-design system forsupporting sustainable fashion design, production, and consumption, and discussed thecapability of fashion designers and craft practitioners to facilitate solutions for sustainablefashion [14]. Their approaches are three-fold: conducting literature reviews to identifythe key factors of non-sustainable fashion design, the implementation of the SustainableFashion Bridges (SFB) Ideation Toolkit, and the SFB online platform. The authors notedthe SFB toolkit facilitated the understanding and development of users and professionaldesigners in terms of sustainable fashion design [14].

The third literatures of human-centered approach are co-production. Arvidsson andMalossi (2011) elucidated the debate around customer co-production and the consumereconomy through a case of Italian fashion. They analyzed the integration of consumersinto the value chains of the culture and the creative industry based on “social factor”and “brand” [15]. They noted the fashion sector represented an example of the passagefrom social factory to brand as modes of the integration of consumer co-production. Theyreferred how fashion has become a core component of the cultural economy from the Re-naissance to counterculture [15]. However, since the 1980s, the brands-centered experienceeconomy came to a central stage in marketing and business practices, while the urbanenvironment and lifestyles remains an important source of value in the forms of customerco-production [15]. Bianchini et al. (2019) noted that the maker culture of productioncreates opportunities for new socioeconomic, organizational, and technological models ofinnovation [16]. Maker spaces, living labs, and experience labs promise a future in whichco-design and co-production practices are increasingly part of the innovation framework inadvanced socioeconomic contexts [16]. Lodovico (2019) explored the recent developmentof open and collaborative fashion design practices in urban spaces and analyzed how thefab lab experience may modify the innovation process in fashion [17]. Findings showedthat the approach of the fab lab to research and experiment are seemingly collaborativeand open to expert and non-expert users [17]. However, the fab lab is required to cope withtraditional production and academic organizations and overcome the lack of trust frompotential users [17].

Another human-centered approach is co-use in terms of sharing fashion. Niinimaki(2021) noted that fashion renting and leasing services are sustainable fashion consumptionoptions to intensify garment use and slow down material flows [18]. She described howFinland consumers converted from resistance to acceptance of sharing services [18]. Sheargued that social aspects of fashion leasing strengthen environmental interests and that itwas active in urban contexts because the phenomenon generated a sense of belonging inlocal neighborhoods and communities [18]. Jain and Mishra (2020) analyzed what factors

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motivated Indian millennials to participate in luxury fashion rental consumption [19].The results showed that social projection is the most significant predictor of intention toconsume luxury fashion goods in a sharing economy [19]. Additionally, the authors notedthe effect of perceived risk and the influence of past sustainable behavior on young con-sumers’ luxury fashion rental consumption [19]. They suggested ownership-like promotioncampaigns to encourage young people to shift to recycling and sustainable fashion [19].

2.2. Circular Fashion and Upcycling Business

Many practices related to circular fashion are based on cooperation with consumers.For example, unused clothes are collected, donated, and sold to waste operators, charityorganizations, and used shops [20]. Moreover, the past few years witnessed the revivalof upcycling trends in circular fashion due to pressing global environmental problems.Upcycling is a process in which used or waste products and materials are repaired, reused,repurposed, refurbished, upgraded, and remanufactured in a creative manner to add valueto the compositional elements [21]. Musova et al. (2019) examined consumer attitudestoward new circular fashion models, namely, slow fashion, Global Organic Textile Standard,and jeans rental [20]. The authors argued that consumers have exhibited the strongestmotivation to buy products from waste or recycled materials. In addition, consumersprefer to support the good will of organizations [20]. Paras et al. (2019) defined upcyclingas the addition of value and the formulation of viable means for reusing garments bymodifying used products [22]. The authors investigated a case study in Romania andprovided practical insights into the process. Based on interview data and field observations,the conditions of the sustainability of upcycling companies were the production of regularproducts, and the redesign of products according to consumer needs [22]. They pointed outthat upcycling businesses are generally regarded to be beset with many economic difficultieswhere demand-based redesign activities can contribute to the profit of organization [22].Townsend et al. (2019) launched an upcycling education project, which was inspired by theartistic upcycled garments produced by Martin Margiela [23]. The objective of the projectwas to gain insights from students regarding social and sustainable issues, specificallyhomelessness, clothing poverty, global environmental concerns, and textile wastes [23]. Inthe project, the local community collects used clothing. Thus, this project also enhancesengagement with citizens and students [23].

2.3. Value Proposition and the SDL

Vargo and Lusch revised the FPs in SDL in 2004, 2008, and 2016, introducing 11 FPs inthe final revision and presenting the conceptual foundation for SDL axioms. In their recentrevision, they pointed out the need to specify the coordination and cooperation mechanismsinvolved in value co-creation through the market as well as society, emphasizing both theinstitutional perspective of SDL and service ecosystem perspective [5]. SDL redefines theservice ecosystem as a relatively self-contained, self-adjusting resource system integratingthe actors by shared institutional arrangements and mutual value creation through serviceexchange [24]. Lusch and Vargo (2014) also suggested that the service ecosystem has anested structure consisting of micro, meso, and macro systems. The different actors in theservice ecosystem co-create value through interaction at various levels to create differentvalue proposition categories [24]. Quero and Ventura (2019) used value proposition as aframework to analyze value co-creation in Spanish business crowdfunding ecosystems [25].In a qualitative multiple case study, they analyzed the crowdfunding platforms in micro-,meso-, and macro-contexts to find that crowdfunding can be considered a service ecosystemonce all the participants exhibit positive synergies in funding [25].

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Lusch and Vargo (2016) presented the core concepts of SDL as follows: service is thefundamental basis of exchange (FP1), the customer is always a co-creator of value (FP6), allsocial and economic actors are resource integrators (FP9), value is always uniquely andphenomenologically determined by the beneficiary (FP10), and value co-creation is coordi-nated through actor-generated institutions and institutional arrangement (FP11) [5]. UsingSDL, Mele (2009) analyzed the value innovation in business-to-business relationships inboth the manufacturing and service sectors [26]. She argued that innovations develop valuepropositions, which in turn provide customer service solutions through the integrationof goods, services, systems, processes, and technology [26]. However, value co-creationis coordinated through actor-generated institutions and institutional arrangements [5]and created and determined through user consumption and the interaction of actors [9].Furthermore, value co-creation is created through reciprocal services based on engagementbetween business actors and partners.

According to Lusch and Vargo (2006), value co-creation has two components: co-creation of value and co-production [9]. The first component is the co-creation of value.This represents the creation and generation of value through the interaction of businessactors and the customer and is not the addition of value [9]. The second component is co-production. Lusch and Vargo (2006) showed that under co-production, users collaborativelyproduce goods with producers, for example, through shared inventiveness, co-design, co-use, or shared production of goods through the value network [9]. They also pointed outthat co-creation is superordinate to co-production, although the concepts form a nestedstructured [9]. Figure 1 presents the encompassing relationship between SDL and goods-dominant logic (GDL) as modified by Taguchi (2010) [27].

Figure 1. SDL and value co-creation (modified from [27]).

3. Outline of the Analytical Framework

This section outlines an analytical framework based on the literature reviews. Thisstudy explores how and what collaborative interactions create value propositions thoughvalue co-creation and analyzes the value propositions based on two Japanese case studies,the Onomichi Denim Project and REKROW. The study applies SDL to analyze the micro-level service ecosystem in both case studies, framing the interaction between the businessactor and customer (B-C), and between the business actor and business actor (B-B) toinvestigate the value propositions. Additionally, Vargo and Lusch (2016) noted that therelationship between business actors in the SDL does not strictly define the producersor consumers because they engage in benefitting their own existence by benefiting otherenterprises through service-for-service exchange [5]. Thus, this study regards B-C and B-Bas social and economic actors and their interaction as service-for-service exchange.

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Figure 2 presents the analytical framework illustrating the concepts of value co-creation and the human-centered approach as modified by Groonroos and Voima (2013).Gronroos and Voima (2013) suggested that value creation involves a customer sphere andprovider sphere [28]. This study interprets the concept of Gronroos and Voima (2013) andadopts four human-centered approach, namely, co-design, co-creation, co-production, andco-use. In Figure 2, value in exchange is applied as service-for-service exchange for notonly B-C, but also B-B. Additionally, this study regards value co-creation as the upperconcept relative to human-centered approach. Table 1 presents an analytical frameworkthat describes the creation of locus and interaction process.

Figure 2. The framework of value proposition and human-centered approach (modified from [28]).

Table 1. Analytical Framework.

Firms Creation of Locus Interaction Process

The Onomichi Denim Project Value in exchangeValue in exchange

Interaction between B-CInteraction between B-B

The REKROW Value in exchange Interaction between B-CValue in exchange Interaction between B-B

4. Methodology4.1. A Case Study Method

A case study method denotes a discipline that elucidates “why” and “how” a particularphenomenon occurs. It is a research method that empirically explores events that occurin the real world based on pre-specified procedures [29]. The case study approach canbe used to provide empirical evidence for policy making and to formally verify “whatworks” for a development [30]. Knowing the why and how of cases are meaningful for theresearch because it works not only for development cases in developing countries but alsofor business cases.

4.2. Selecting Cases

The selected cases are the Onomichi Denim Project and the RECROW in the Hiroshimaprefecture of Japan. Onomichi is located in the eastern part of Hiroshima and is known as aport city since the early times. The city is also known as the center of bicycle touring, withShimanami Way as the starting point of many routes due to its scenic views. A part of thisarea is called Sanbi, which is the generic and old name of three areas, namely, Bizen, Bizhu,and Bingo. The first two belong to the western side of the Okayama prefecture, whereasBingo is located in Fukuyama city, on the east side of the Hiroshima prefecture.

Figure 3 depicts the location of the Sanbi area, which is one of the birth places ofJapanese cotton kimono since the 1600s. These areas are known as the manufacturingcluster of the Japanese denim industry. According to Fujioka and Wubs (2020), Bizen wasthe largest producer in the 1970s with several small clustered of manufactures. However,the volume of production decreased after the 1990s [31]. Conversely, the volume of denimproduction in Bingo increased since the 1990s due to Kaihara Co., Ltd., Hiroshima, Japan,

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which is the Japanese leading textile company in Fukuyama city [31]. Kaihara is alsoknown for its production of UNIQLO jeans, the Onomichi Denim Project, and the REKOW.Additionally, several European high brands also deal with the business in this region. Thisstudy selected the Onomichi Denim Project as a case study because it employs a uniqueco-production approach to manufacture used jeans. The REKROW is known as a circularfashion business that creates products using used clothing. Indeed, the REKROW receivedthe crQlr Awards in 2021, which is given to outstanding projects and ideas for designingcircular economy in Japan. Therefore, this study considers both organizations as qualifiedcases to examine the creation of value propositions for green businesses.

Figure 3. The process of the case study method.

4.3. Data Collection

Data were collected from the existing literatures, magazines, website, videos, andsocial networking services. This study also conducted face-to-face and remote interviewswith Masahiro Idehara (CEO of the DISCOVERLINK Setouchi Inc., Hiroshima, Japan), KyoWatayoshi (a sales staff of the Onomichi Denim Project and the REKROW), Kazuhiro Goto(CEO of the Kadoya Inc., Tokyo, Japan), and Arata Fujiwara (CEO of the MOONSHOT Inc.Kuon, Tokyo, Japan).

5. Case Studies5.1. DISCOVERLINK Setouchi Inc.

The Onomichi Denim Project and the REKROW belong to an organization namedDISCOVERLINK Setouchi Inc. in the Hiroshima prefecture of Japan, which operatedvarious businesses in this region, such as fashion, traditional kimono, Hito to Ito (humanresource development program), social clubs (Onomichi Free University), shared offices,regeneration of old houses, hotels, and bicycle rental service. These linkages not onlycontribute to the profit making of its businesses but also contribute to local revitalization.The majority of businesses were launched to solve local problems, which were, thus,extended step by step [32]. For example, the reason for launching the hotel business was toaddress the unoccupied house problem in the Tomonoura area in Onomichi city [32], whichis recognized as a historic district and is characterized by several nationally importantcultural properties.

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5.2. A Case of the Onomichi Denim Project

The Onomichi Denim Project was established in January 2013 in Onomichi in theHiroshima prefecture of Japan with DISCOVERLINK Setouchi Inc. as its parent organi-zation, who launched a shop named after this project. It aims to disseminate the appealof jeans made in Hiroshima and to attract tourists to this region. In the leaflet, the mottois “the Onomichi Denim Project is a refreshing antidote to fast, disposable fashion [33]”.The approach employed by the project is to request citizens to wear two pairs of jeansfor one year and collect their jeans once a week for washing based on co-production withcitizens in this community. Additionally, the project also employs the commission-basedsystem that customers can participate in the project if they purchase a special ticket. Theused jeans made by citizens are dedicated to rich, individual stories based on people’sliving, occupations, and work in the community, which cannot be expressed by machinewashing and processing. They believe the inherent value of the jeans comes from theselocal participants, who work and live in this community. They are proud of what theymade because it is the only one of its kind in existence, which strikes a chord with fash-ion lovers everywhere [33]. This project started with 240 participants in 2013. Currently,approximately 100 citizens are participating in this project. Since 2013, the project hasserved a total of 800 to 900 participants, which are mainly composed of farmers, carpenters,monks, welders, dentists, cooks, kindergarten teachers, fisherman, staffs in cafes, engineers,consultants, automobile technicians, sake brewers, and furniture workers. A city mayoralso participated in this project as a private person. As Idehara (2021) explained, the projectdid not make an elaborate announcement [32]. Instead, information about the project wasspread through word-of-mouth among the citizens with the increase in participation [32].

Figure 4 presents the management system developed by the Onomichi Denim Project,which adopted the following procedures. First, the project requests participants to returntheir jeans once a week, which are brought to specialized stores for washing. Then, thejeans are returned to the participants to wear for work. Moreover, faded jeans can changeaccording to the occupation of the individual. Participants who wear boots for work canleave the outline of boots on their jeans. Office workers tend to impose sedentary lineson the jeans. For participants who work for a painter, their jeans look similar to a JacksonPollock painting. Participants who are required to drop on their knees for work tend tobreak the knees of the jeans. For example, a kindergarten teacher in charge of older childrenwill tend to only thin out the knees of the jeans compared with a teacher of younger children,where the knees of the jeans are more likely to break. Even the color of the jeans can differbetween farmers: those who grow citrus fruits turn the jeans into pale yellow, whereas thoseworn by farmers who mow grass changed the color into pale green. Faded jeans expressdifferent tastes compared with machine-washed jeans. The advantage of machine-washingjeans can deliver consistent values and homogeneity, while the disadvantage of mass-produced products is a somewhat lack of distinctiveness. The advantage of this project isthat each participant produces only one pair of jeans, which is unique to the world. Theprocess of the production of jeans takes one year, where the entire processing step excludeschemical washing. This process ensures that jeans produced by the Onomichi DenimProject are environmentally friendly as well as conforming to slow fashion. Additionally,in general, the process of spinning yarn produces a large amount of “fiber waste” called“fallen cotton”. According to Watayoshi (2021), Kaihara Co., Ltd. orders denim cloth madeof blended cotton, which is a mixture of pure and fallen cotton [34]. Jung and Jin (2016)pointed out the effects of long-distance logistics on the environment, which leads to alarger carbon footprint, compared with that of community-based fashion [35]. In the caseof the Onomichi Denim Project, the entire process of jeans production, such as spinning,coloring, sawing, processing, washing, and finishing are operated within Fukuyama cityand Onomichi city except for the material, which is American produced cotton. In otherwords, the local production of jeans contributes to environmental sustainability. For thesereasons, jeans enthusiasts all over the nation visit the Onomichi Denim Project to purchase

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such ingenious jeans, despite the costly prices, which range from 350 to 650 USD, beinghigher than those for ordinary jeans.

Figure 4. The project management system in the Onomichi Denim Project.

5.3. A Case of the REKROW

In 2020, the REKROW was established in Fukuyama city of the Hiroshima prefectureto promote circular fashion, which is based on the upcycling of clothing, that is, used anddiscarded clothes from companies and factories. Figure 5 illustrates the circular systemadopted by the REKROW, which follows two main operations: the first pertains to thecollection of used and discarded clothing from the various companies and factories, andthe second denotes the design of new clothes and uniforms using the collected used anddiscarded clothing. Additionally, their business plan requests consumers to return thedenim products for another round of upcycling. The business strategy is to achieve anendless circle of recycling in this region. The business motto of the REKROW is “creatingproduction-oriented circular economy where work clothes that have finished their dutiesare reborn”. In order words, the purpose of the business is to facilitate the region inpracticing circular fashion by exploiting the characteristics of the production area as textileand apparel industries, particularly the denim business.

Figure 5. Workflow of endless recycling in the REKROW.

The project name “REKROW” is an anagram of the word “WORKER”, because theproduction of work clothes is a major industry in an area of the eastern part of the Hiroshimaprefecture. However, with the progress in globalization, cheaply produced clothes areimported in large quantities overseas. The textile industry is considered a declining industry

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in Japan, while small and medium sized textile and apparel companies in the Sanbi areasurvived by adopting a series of industrial structural adjustments sustained the community-based fashion businesses. [36]. Kazuya Yamaguchi, the founder of the REKROW and themanager of DISCOVERLINK Setouchi, Inc., mentioned that this project aimed not onlyto create a new value for discarded work clothes, but also a new economic cycle, whichcontributes to sustain the declining local textile industries [37]. The motivation of thisproject is “mottainai,” which means “how wasteful it is to discard things.” Mottainai cameto mind when Yamaguchi heard that used denim uniforms from the Tsuneishi shipbuildingcompany in Onomichi city were discarded. These work clothes were manufactured byan apparel division of DISCOVERLINK Setouchi Inc., where Tsuneishi ordered (a totalof 4000 denim jackets and 4000 denim pants). The work clothes were made in 2018 tocommemorate the 100th anniversary of the Tsuneishi Shipbuilding Co. with the intentionmaking work clothes in which workers can take pride and desire to work for the company.A graphic designer named Rikako Nagashima and a fashion designer named Ryota Iwai inAURALEE, Tokyo, and Kaihara Co., Ltd., participated in the design team for developingthe concept of the work clothes [38]. Special denim fibers were weaved, which doubledthe strength of the denim but reduced its density in half to make the uniforms durablebut breathable. Additionally, by using pleats on the back and designing a loose silhouetteat the hem of the jacket to secure the amount of exercise, a uniform was designed that iswell ventilated and separated from the skin in the summer and can be worn as an inner inthe winter.

The REKROW produced various products using the used jeans uniforms. For ex-amples, they collaborated with the Kuon, which is an apparel company in Tokyo. Thephilosophy of Kuon is to solve the social issues and make people happy through fash-ion [39]. The patchworked jackets, which used old vintage textile, is typified by the design.A designer, Shinichiro Ishibashi in Kuon worked with the REKROW to produce cardigans,waist coats, and aprons. The Snow Peak is a known Japanese-designed outdoor companyin the Niigata prefecture of Japan. The mission of the Snow Peak is to create restorativeexperiences in nature through legacy-grade gear and apparel [40]. The REKRO and theSnow Peak collaboratively operated the local tourism project in Onomichi city and then,stuffs in the REKROW had lectured a history of textile and apparel in this region [34].Another partnership is that between Stephen Kenn, a furniture company in Los Angeles,California, which developed armchairs upholstered using the used denim uniform [40].The design used for the upholstery was beautifully patchworked and exploited the char-acteristics of used denim. Furthermore, the REKROW cooperated with two educationinstitutes. The REKROW developed educational programs with the Bunka Fashion collegeand the Hito to Ito. Bunka Fashion College is the first fashion school in Japan, which wasestablished in 1919 and produced many designers that are renowned worldwide. Thestudents presented their upcycling work using the used denim uniform from the REKROW.In addition, Hito to Ito was launched as a human resource development program for thelocal textile companies [41]. The background of this project is to foster sewing leaders forthe management of workers [42,43].

6. Discussion

The study addresses how the Onomichi Denim Project and the REKROW createdvalue propositions based on the value co-creation for green businesses. The study analyzesthe process of collaborative interactions and generation of its value propositions based onthe analytical framework. Figure 6, and Tables 2 and 3 present the summary of the findings.

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Figure 6. A structure of value propositions (modified from [29]).

Table 2. The Onomichi Denim Project.

Interaction Collaborator Type Value Propositions

B-C Customer U1 Ingenuity, environmental, embedded social valueB-C Participant U2 Ingenuity, environmental, embedded social valueB-B Kaihara P3 Environmental value, synergetic valueB-B Bunka fashion P3 Educational value

Table 3. The REKROW.

Interaction Collaborator Type Value Propositions

B-C Customer U1 Ingenuity, environmental valueB-B Kuon P1, P2 Environmental value, synergetic valueB-B Snow Peak P2 Synergetic valueB-B Stephen Kenn P3 Environmental valueB-B Hito to Ito P3 Educational valueB-B Bunka Fashion P3 Educational value

6.1. The Onomichi Denim Project

(1) U1: B-C

There are three value propositions observed: ingenuity value, embedded social value,and environmental value propositions. The Onomichi Denim Project employs a participa-tory system for jeans production. Faded jeans are co-produced with citizens from the localcommunity. Customers are impressed with the stories behind each pair of jeans. Each pairexhibits a unique display of faded marks and links, solely dependent on the occupations ofworkers. From the customer’s perspective, the ingenuity value proposition of the OnomichiDenim Project is the co-production of jeans through a networking of their family, friends,and neighbors. News about the jeans spread through word-of-mouth instead of publicadvertisement, which indicates the effective the embedding social proposition. The findingrelated that the Onomichi Denim Project was a slow-fashion practice and tool up to a yearto make jeans with citizens. In modern times, the concept of time is considered importantfor efficiency and productivity. The Onomichi Denim Project represents the concept thatthe investment of time and community-based production provides customers with anenvironmental value proposition.

(2) U2: B-C

The uniqueness of the Onomichi Denim Project is the participation in the productionprocess by both citizens from the local community and customers from a distance. Inthe case of customers from a distance, value co-creation environmental value propositionand embedded social value proposition is facilitated. However, in the process of value inexchange, customers received the environmental value proposition through selling their

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used clothes. Raising of the recent environmental awareness, consumers are having afavorable image into used clothes. From now, the supply from U2 to P3 expects to increase.

(3) P3: B-B

The Onomichi Denim Project collaborated with the Kaihara Denim Co. This in-teraction creates environmental value propositions based on jeans co-production. Theycollaboratively produced environmentally friendly denim, which included the fallen cottonin factories. Additionally, the local production system is regarded as environmentallyfriendly system.

(4) P3: B-B

The interaction between the Onomichi Denim Project and the Bunka Fashion Collegegenerated the educational value proposition. Students gain the practical experiencesand knowledge about how to create jeans through participating in the projects. Indeed,students also learned life lessons and work ethics from the project, which is about howpeople earn livelihood.

6.2. The REKROW

(1) U1: B-C

This study considers the interaction between the REKROW and customers that createsenvironmental value and ingenuity value proposition. The REKROW processes discardeddenim uniform and delivers them to consumers. Their approach is a production-orientedcircular economy that facilitated a region that engages in circular fashion. Similar to theOnomichi Denim Project, the advantage of the local production system significantly reducescarbon footprint [35]. Moreover, the REKROW produced upcycling waste in the uniqueway. These facilitated ingenuity value proposition.

(2) P1, P2: B-B

The interactions between the REKRO and the Kuon created environmental valueand synergetic value propositions. For example, the REKRO and the Kuon applied theco-design approach to produce upcycling clothes using the used work uniforms. Addi-tionally, the REKRO provided the concept that using the used work clothes for upcyclingprovides alternative values. The Kuon provides the design skills that accumulated theirown products. Their reciprocal process created the upcycling fashion that is regarded assynergetic value proposition.

(3) P2: B-B

The interactions between the REKRO and the Snow Peak create synergetic value propo-sition. The Snow Peak regularly hold the workshops outside and provide opportunities forcustomers to use their products. In the workshop, the REKROW provides their knowledgeabout a history of textile and apparel in this region. From a viewpoint of the REKROW, it isan occasion to attract potential buyers and gain reputation. Their collaboration enhancesmultiplicative effects that facilitate synergetic value proposition.

(4) P3: B-B

The interactions between the REKRO and Stephen Kenn create environmental valueproposition. Their collaboration created the armchairs upholstered using the used textile.This environmentally friendly textile provides the benefit to Stephen Kenn. Additionally,the REKRO also had a reputation for being green business.

(5) P3; P3: B-B

There are two educational value propositions observed through co-production. Stu-dents in the Hito to Ito play a role in the making of used work clothes through sewing.Students in the Bunka Fashion Collage also play a similar role, by designing the clothesthemselves. It is a part of the merchandizing course. The REKURO offered the material

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resources that students use and opportunities that students present their works throughco-operating the workshop.

7. Conclusions

This study has attempted to address how SMFBs can generate value propositionthrough B-C and B-B interaction to promote green businesses. The study employed theexploratory case study of two Japanese businesses, the Onomichi Denim Project and theREKROW. The study identified four value elements contributing to value propositions:environmental value, embedded social value, synergetic value, and educational valueproposition. These elements developed through ecosystem, such as a unique co-productionsystem embedding of social ties and the establishment of a production-oriented circulareconomy. This study proposed value creation through value propositions as a strategycrucial to the survival of SMFBs during difficult situations.

The findings of the study contribute to green SMFBs. The study clarifies how SMFBsdevelop the value propositions for green business based on the analytical frameworkarticulating the concepts of SDL. Additionally, the study examined the concept of valueproposition with various human-centered approaches. The attributes developed by the casestudies provide evidence in SMFBs. From a managerial perspective, this study revealedimportant insights into the value proposition in small fashion business. In the case ofthe Onomichi Denim Project, the study clarified how social ties created ingenuity valueproposition. Such interaction management help to produce alternative value co-creation.In the case of the REKROW, a designers play a significant role for value propositions.Designers are key actors for management of circularity because designers can access a vastamount of information such as information regarding discarded clothes about day-in-andday-out business.

The current awareness of the importance of the value propositions is expandingfor practitioners and academia. Consumers as well as employees are now consideredincreasingly important for interactive brand co-creation [44]. Moreover, co-creation, whichis generated by social capital, is recognized as the driving force of economic growth [45,46].The brand co-creation and social capital are challenges for future research themes.

Funding: This research received no external funding.

Institutional Review Board Statement: Ethical review and approval were waived for this study, dueto no violation of individual privacy.

Informed Consent Statement: Informed consent was obtained from all subjects involved in the study.

Data Availability Statement: Not applicable.

Acknowledgments: The author would like to thank DISCOVERLINK Setouchi Co., Ltd. theOnomichi Denim Project, and REKROW. I would like to thank for comments from anonymousreferees, which have helped to substantially improve the manuscript.

Conflicts of Interest: The author declares no conflict of interest.

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